global fixed investment outlook

© 2016 IHS

Presentation

ihs.com

IHS

Shifting tides: Global fixed investment outlook

World Industry Service

Mike Ryan, Principal Economist, +1 202 481 9449, [email protected]

Q2-2016

ECONOMICS AND COUNTRY RISK

© 2016 IHS

Industry intelligence

2

Investment Outlook / Q2-2016

A global set of comparable

sector forecasts, analysis,

sector expertise, and ranking

capabilities to assess market

risks and opportunities

• Harmonized views and metrics of

industries and countries for accuracy,

consistency and global comparison

• Includes 95 industries for each

of the 75 largest economies

(96% of world GDP)

• Data sourced from national income

accounts and multilateral agencies

• Industry metrics include:

• Production

• Investment

• Profitability

• Trade patterns

• Country/industry-specific prices

© 2016 IHS 3


Commodity bust

Dollar volatility

China slowdown

Diverging monetary

policy

$17.5 Trillion

2015 Global Investment

Major

themes

© 2016 IHS

World outlook led by investment

4


-8

-6

-4

-2

0

2

4

6

8

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

GDP Fixed Investment Private Consumption

World

© 2016 IHS 5

US and China outlook Real growth, annual percent change


Inflection Point

-15

-10

-5

0

5

10

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20


United States

0

5

10

15

20

25

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20


China

© 2016 IHS

Reversal in fortunes – Global ‘decoupling’

6


World

Benchmark

Bubble size = 2015 CapEx spend

India

Assoc. S.E. Asian Nations

Persian Gulf States

China

Pak., Bang., SL

United States

Sub-Saharan Africa

Japan

Mexico

S. Korea

Western Europe

Canada

Australia/NZ

Russia

Brazil

-10

-8

-6

-4

-2

0

2

4

6

-4 -2 0 2 4 6 8 10 12 14

2000-15 Real CapEx CAGR

De

lta:

20

16

-20

min

us

20

00

-15

Re

al C

apEx

CA

GR

Global CapEx outlook

$600

billion

$4.9

trillion

$3.3

trillion

$3.5

trillion

© 2016 IHS

Services will lead while materials and machinery slow

7


Bubble size = 2015 CapEx spend

Tech Services

Healthcare

Business Services

Communications

Transport, Log, Wholesale

Public

Real Estate

Media

Construction, Materials

Consumer Industries

Chemicals, Plastics, Rubber

Oil and Gas Complex

Industrial Machinery

Financial Services

Motor Vehicles, Parts

Metals and Metal Mining

-6

-5

-4

-3

-2

-1

0

1

2

3

4

5

0 1 2 3 4 5 6 7 8

Sector Rotation Sector Rotation Sector Rotation Sector Rotation

2000-15 Real CapEx CAGR

Delt

a:

2016-2

0 m

inu

s 2

000

-15 C

AG

R

Sector Rotation Sector Rotation Sector Rotation Global CapEx outlook

Computers and Electronics

Water Utilities All Sectors

Benchmark

$4.1

trillion

$750

billion

© 2016 IHS

Risks to forecast

China Hard landing / Domestic imbalances

Pace of financial liberalization

RMB devaluation?

Other Emerging Markets Managing fall in commodity

export revenues, depreciating

curriencies, and high levels of

dollar-denominated debt

Political stability

United States Pace and magnitude of

interest rate hikes

Dollar appreciation

Trajectory of earnings

Europe Flagging recovery

Austerity fatigue

Migration crisis

BREXIT

Russian fiscal situation

Ukraine resolution

Middle East Enduring low oil prices

Conflict / unrest

Saudi to de-peg vs. USD?


8

© 2016 IHS

Definitions of regions used in this presentation

11


World Total

(75 Countries) 20 Countries & Regions Countries Comprising the Regions

North America Canada, Mexico, United States

Europe France, Germany, United

Kingdom, Poland, Russia

Nordic Region Denmark, Finland, Norway, Sweden

Remaining Europe Austria, Belgium, Bulgaria, Czech Republic, Greece, Hungary,

Ireland, Italy, Netherlands, Portugal, Romania, Slovak Republic,

Spain, Switzerland, Turkey, Ukraine

Asia Pacific China, India, Japan, South Korea

Australia - New Zealand Australia, New Zealand

Remaining Asia Pacific Bangladesh, Hong Kong, Indonesia, Malaysia, Pakistan,

Philippines, Singapore, Sri Lanka, Taiwan, Thailand, Vietnam

Middle East Middle East Bahrain, Egypt, Iran, Israel, Jordan, Kuwait, Qatar, Saudi Arabia,

United Arab Emirates

Latin America Brazil

Remaining Latin America Argentina, Bolivia, Chile, Colombia, Ecuador, Honduras, Jamaica,

Panama, Peru, Uruguay, Venezuela

Africa Africa Cameroon Kenya, Morocco, Nigeria, Senegal, South Africa,

Tunisia, Zimbabwe

© 2016 IHS

Definitions of sectors used in this presentation

12


19 Sector Composites 95 ISIC (International Standard Industry Classification) Revision 3

1 Agriculture, food, wood, paper

Agriculture (A_B), food and beverages (D15), tobacco (D16), wood products (D20), paper & [ulp (D21)

2 Business Services Business Services (K74)

3 Chemicals, Plastics & Rubber Chemicals excl. Pharma (D24 excl. D2423), Plastics & Rubber (D25)

4 Communication Services Post & Courier Services (I641), Communication Services (I642)

5 Computers & Electronics Computers & Office Machinery (D30), Communication Equipment (D32)

6 Construction, cement & glass Construction (F), glass & products (D261), cement, concrete, lime (D269C), other mineral products (D269O)

7 Consumer Oriented Sectors

Textiles (D17), Wearing Apparel (D18), Leather & Footwear (D19), Ceramic Products (D2691), Domestic

Appliances (D293), Optical & Photographic Equipment (D332), Watches & Clocks (D333), Furniture & Other

Manufacturing (D36), Retail Trade (G50, G52), Private Household

8 Energy Complex Coal Mining (C10), Oil & Gas Mining (C11), Uranium Mining (C12), Refined Petroleum & Nuclear Fuel (D23),

Electricity, Gas & Steam (E40), Pipeline Transport (I603)

9 Government, defense, education Public administration & defense (L), education (M), sanitation, trade organizations

10 IT services and R&D Computing services (K72), research & development (K73)

11 Machinery for Industry General and Special Industrial Machinery (D291, D292), Electrical Machinery (D31)

12 Media & Entertainment Hotels & Restaurants (H), Recreational, Cultural & Sporting (O92), Printing & Publishing (D22)

13 Medical & Healthcare Pharma: Drugs and Medicines (D2423), Medical & Measuring Equipment (D331), Healthcare Services (N)

14 Metals & Metal Mining Mining of Metals & Quarry (C13, C14), Basic Metals (D27), Fabricated Metal Products (D28)

15 Motor Vehicles, Parts, Motorcycles Motor Vehicles, Trailers and Parts (D34), Motorcycles, Bicycles, Transp. Equip. (D359)

16 Financial Intermediation Financial Intermediation (J), Leasing of Machinery & Equipment (K71)

17 Real Estate Real Estate (K70)

18 Transportation & logistics Transportation services (I60-I63, excl. I603) and transport equipment (D351-D353), wholesale (G51)

19 Water Utilities & Recycling Recycling (D37), Water Supply (E41)

global fixed investment outlook

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